Muhamet Yildiz, Professor of Economics
| Jan/11 | Wed | 02:30PM-04:00PM | E52-432 |
Enrollment: Limited: First come, first served (no advance sign-up)
I will present some recent research on global games with an application to causes of equilibrium shifts in dynamic coordination games. I will introduce rank beliefs (i.e. conditional expectation of players' own percentiles) and describe the central role they play in the analyses of global games. Using rank beliefs one can extend the risk-dominant selection results in global games literature to arbitrary type spaces (including multi-dimensional type spaces that are common in practice). With model uncertainty, under canonical global games setup, rank beliefs take a specific shape. In that case, small shocks to the fundamentals shift the equilibrium to a latent solution. Consequently, one can identify the kind of shocks that are effective--in shifting to a "bad equilibrium" as in crises or shifting to a "good equilibrium" as in recovery.
Sponsor(s): Economics
Contact: Beata Shuster, E52-439A, 617 253-8883, BSHUSTER@MIT.EDU